Knight tenders for $1.6 billion of bonds

New York, Feb. 21 - Knight Inc. said it has begun a cash tender offer for up to $1.6 billion of bonds issued by itself and affiliates.

The Houston-based energy transportation and storage company, formerly called Kinder Morgan, Inc., will fund the offer with part of the proceeds from its recently completed sale of MidCon Corp., cash on hand and, to the extent necessary, borrowings under its $1 billion senior secured revolving credit facility.

Tenders will be accepted according to priority levels.

Details of the bonds covered by the tender are as follows:

• KN Capital Trust I's 8.56% series B passthrough securities due 2027 with $100 million outstanding. Knight will pay $1,000.00 per $1,000 principal amount, including a $30.00 early tender premium. These securities are priority level 1.

• KN Capital Trust III's 7.63% passthrough securities due 2028 with $175 million outstanding. Knight will pay $930.00 per $1,000 principal amount, including a $30.00 early tender premium. These securities are priority level 1.

• KN Energy, Inc.'s 7.45% senior debentures due 2098 with $150 million outstanding. Knight will pay $920.00 per $1,000 principal amount, including a $30.00 early tender premium. These securities are priority level 1.

• KN Energy, Inc.'s 7.25% senior debentures due 2028 with $493 million outstanding. Knight will pay $1,000.00 per $1,000 principal amount, including a $30.00 early tender premium. These securities are priority level 1.

• KN Energy, Inc.'s 6.67% debentures due 2027 with $150 million outstanding. Knight will pay $960.00 per $1,000 principal amount, including a $30.00 early tender premium. These securities are priority level 1.

• Kinder Morgan Finance Co. ULC's 6.4% senior notes due 2036 with $550 million outstanding. Knight will pay $905.00 per $1,000 principal amount, including a $30.00 early tender premium. These securities are priority level 1.

• KN Energy, Inc.'s 6.5% debentures due 2013 with $30 million outstanding. Knight will pay $1,010.00 per $1,000 principal amount, including a $20.00 early tender premium. These securities are priority level 2.

• Kinder Morgan, Inc.'s 6.5% senior notes due 2012 with $1 billion outstanding. Knight will pay $1,040.00 per $1,000 principal amount, including a $20.00 early tender premium. These securities are priority level 3.

• Kinder Morgan Finance Co. ULC's 5.7% senior notes due 2016 with $850 million outstanding. Knight will pay $950.00 per $1,000 principal amount, including a $20.00 early tender premium. These securities are priority level 4.

• Kinder Morgan Finance Co. ULC's 5.35% senior notes due 2011 with $750 million outstanding. Knight will pay $1,020.00 per $1,000 principal amount, including a $20.00 early tender premium. These securities are priority level 5.

• Kinder Morgan, Inc.'s 5.15% senior notes due 2015 with $250 million outstanding. Knight will pay $920.00 per $1,000 principal amount, including a $20.00 early tender premium. These securities are priority level 6.

Knight will accept all notes tendered with a priority level of 1 and then subsequent priority levels in order up to a total of $1.6 billion principal amount. Knight said it retains discretion to increase the size of the offer.

The tender ends at midnight ET on March 19. The early tender deadline is 5 p.m. ET on March 5. Holders must tender by the first deadline to receive the early tender premium.

Knight will also pay accrued interest up to but excluding the payment date.

Citi (call collect 212 723-6106 or 800 558-3745) and Merrill Lynch & Co. (call collect 212 449-4914 or 888 654-8637) are dealer managers for the offer. The information agent and depositary is Global Bondholders Services Corp. (212 430-3774 or 866 470-4200).

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